December 17, 2012

China Stealing Christmas

China stole Christmas past and maybe future with the help of Goldman Sachs and other Wall Street firms and bankers. China from around 1980 on was ready to sell us goods at cheap prices and in the late nineties Goldman, and other corporate culprits, devised a way for the American citizen to pull equity out of their homes, when in fact there was very little equity, to buy goods from China. The gimmick was sub-prime loans.

Now, as a result, we are in a battle with China to maintain our standard of living and our economic position in the world. We not only lost the equity in our homes, but at the same time transferred much of our wealth to Asia by consuming what they produced. The battle is not over; however, we need to make serious adjustments if we are to win.

"By 2030 Asia will be well on its way to returning to being the world’s powerhouse, just as it was before 1500."

Presently the Defense budget of the United States is equal to the combined defense budgets of the next 13 countries in the world.

Our defense budget is $711 billion while China's is $150 billion, a little more than 20% of ours. India's defense budget is not even among the next 13 countries.

The Next Generation/American Progress report, The Competition that Really Matters, found that by 2030 China will have 200 million college graduates -- a number that eclipses the total U.S. workforce -- and by 2020 India will be graduating four times as many students from college as the United States.

Another problem is the lack of early childhood education for half of U.S. children and the quality of teachers, the Next Generation/American Progress report said.

"In the United States, high school students who choose to enter undergraduate programs for education have SAT scores on average in the bottom third of all students tested, which stands in sharp contrast to nations with impressive student results," the report found.

China and India are overtaking the United States in college graduates as summarized by the graph below taken from a study by the Center For American Progress linked above.

Unless we decide to use our defensive weapons for offensive purposes, by 2030 we will no longer be the dominant economic power in the world.

Defense As % of GDP

Below are two charts, one comparing what the United States spends on Defense as a percent of GDP and the other comparing our federal, state and local Education budgets to GDP. They both hover around 5%.

Given the state of the world, we are more at risk of losing our position in the world as a result of falling behind in education than we are of being defeated militarily.

Federal, State, and local education as % of GDP

Therefore, we should be reducing our defense budget and transferring the funds to education. We can no longer be the military power for the rest of the West. They must start paying more for their defense.